All over Spain today people did not show up for work. A general strike stalled public transportation, interrupted TV broadcasts, and shuttered factories and schools. The strikers are protesting sharp government cutbacks and big changes to labor laws; changes that are intended to jumpstart Spain's stagnant economy.

And as Lauren Frayer in Madrid reports, there could be more severe austerity measures to come.

(SOUNDBITE OF PROTEST)

LAUREN FRAYER, BYLINE: Among those who are on strike here is Javier Organero, an elevator mechanic with two kids to feed. What worries him the most about new labor reforms is the clause that lets all employers opt out of collective bargaining agreements and set lower wages.

JAVIER ORGANERO: (Through translator) I'm scared because every day things are getting worse and I've got a mortgage to pay. The salary we have, it's already been reduced. What they're telling us is you've got to work more and earn less.

FRAYER: Spain's ruling conservatives say the reforms are needed to modernize and antiquated system in which some, usually older workers, have jobs for life but others can't get a foot in the door. One in four Spaniards is jobless and the rate hits nearly 50 percent for youth. But unions accuse the government of taking advantage of the economic crisis to strip workers of their rights.

David Le More is a spokesman for UGT, one of the two biggest unions in Spain and sponsor of the strike.

DAVID LE MORE: This is a complete change of the system. So, from now on, you can be moved. You can be fired. You can have your salary lowered. You cannot go to court. It's a lot of bad things for the working-class.

FRAYER: Labor reform has become a rallying point here. Even the jobless who actually stand to benefit from the reforms, because of hiring incentives, have joined demonstrations in the strike.

Ester De Andres is 58 and out of work, even though she's both a computer programmer and a nurse.

ESTER DE ANDRES: (Through translator) The biggest problem is that nothing has been done to reactivate the economy and create jobs. The method has just been cut, cut, cut. And so we get more poor and there's less money to spend.

FRAYER: Unfortunately, the worst could be yet to come. Markets have been jittery over Spain shrinking economy and increasing borrowing costs. Tomorrow, the prime minister unveils his new budget with up to $50 billion gone from government programs. Brussels is watching for signs he's serious about austerity. But the Spanish people fear their welfare state may soon be dismantled.

Juan Jose Toribio, economist at Spain's IESE Business School, says the cuts may entail unprecedented fees for health and education.

JUAN JOSE TORIBIO: Unfortunately, this is a necessary condition for the economy to pick up again. After all, there is nothing free in this world, whether we pay for it in our taxes, or whether the users of the services have to pay.

(SOUNDBITE OF PROTEST)

FRAYER: Back on the streets, Danny Serrano is an engineer who's on strike for the first time, though he says he doubts it's the last.

DANNY SERRANO: People are expecting for things to get much worse than they are right now. So, today might be just one of many strikes.